Buy Metro Brands; target of Rs 1325: Motilal Oswal

BUY

Motilal Oswal's research report on Metro Brands

Metro Brands’ (MBL) 1QFY26 revenue grew 9% YoY on a low base (-1% YoY in 1QFY25), driven by a 45% growth in E-commerce and a modest ~4% YoY growth in in-store sales (on the back of ~8% YoY area additions). EBITDA grew 8% YoY (6% miss), as margin contracted ~45bp to 30.9% due to higher marketing spends and ~15bp dip in gross margin. 1QFY26 was impacted by a shift in Eid dates, early monsoon, and subdued consumer sentiments. However, management reiterated its long-term target of 15-18% revenue CAGR, driven by mid-to-high single digit SSSG, store additions, and rising contribution from newer formats. Further, with its robust cost controls and strong store economics, management continues to target over 30% EBITDA and mid-teen PAT margins.

Outlook

We reiterate our BUY rating on MBL with a revised TP of INR1,325, premised on 65x Sept’27 EPS. Consistent double-digit growth and the ramp-up of newer formats such as FILA, Foot Locker, and Clarks remain key re-rating triggers for the stock.

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